The strong demand and issuance are driving record trading volume, with more than $61 billion of US corporate bonds traded per day on average in January, according to data from Crisil Coalition Greenwich.
Frenzied investor demand for corporate bonds has left companies unable to issue new securities fast enough, spurring money managers to increasingly buy debt in the secondary market.
The relentless demand is driving record trading volume. More than $61 billion of US corporate bonds traded per day on average in January, according to data from Crisil Coalition Greenwich. That’s 11% hotter than at the same point in 2025, setting the stage for another heavy trading year.
Other factors are driving trading too. Quantitative traders are growing increasingly active in corporate bonds, boosting liquidity in many of the securities. And geopolitical tensions around Greenland and Venezuela have given investors more reason to cut exposure to some companies and boost holdings in others. The volume is hard to keep up with, some market participants say.
“It’s been relentless,” said Tony Trzcinka, senior portfolio manager at Impax Asset Management, who has managed investment-grade portfolios for over two decades. “We are going home later than usual and getting in earlier.”
Bond Bonanza
The heavy issuance of corporate bonds is set to continue. Big tech companies known as hyperscalers are expected to borrow as much as $400 billion this year to spend on artificial intelligence. Companies are also financing a spree of mergers and acquisitions. US M&A volume has jumped 181% year-to-date to more than $414 billionBloomberg Terminal, from about $147 billion during the same time last year.
The debt deluge is prompting portfolio rebalancing, where investors rotate out of older securities and into newer ones, according to portfolio managers and traders. Oracle’s $25 billion bond sale drew over $129 billion of orders — the largest book ever for a deal of its kind, and was followed by heavy trading in the company’s other securities.
A robust secondary market is a boon for borrowers, as the improved liquidity can help lower their risk premiums.
“Secondary trading has surged, and dealers are being lifted out of inventory,” said Thanh Nguyen, an investment-grade portfolio manager at Vanguard Group Inc. “When supply shows up, buyers are there.”
Nguyen stresses that Vanguard hasn’t rotated out of any one sector in isolation, but has instead trimmed risk where spreads seem stretched or supply risk is rising.
“That’s allowed us to lean into new tech deals proactively,” she said. “Looking ahead to 2026, the playbook is similar. Tech is becoming a bigger slice of investment-grade, and the edge comes from being ready, not reactive.”
Record Demand
The strong start to the year for trading follows a record 2025, which saw an average of $50 billion investment-grade and high-yield bonds traded daily, up from $46 billion in 2024 and the highest level on record.
The first quarter has historically been the most active period for credit trading, and January’s volume has exceeded the trailing 12-month average in every year since at least 2018. March remains the most active month when measured against the same metric.
Automation has helped lift trading volume by more than 40% since 2022, even as sell-side trading desk headcount continues to decline, according to Kevin McPartland, Crisil’s head of market structure and technology research.
“More automation and more quantitatively-driven trading and strategies is definitely helping the market to turn over more,” he said. “You just couldn’t do that if you weren’t automated to grow volume that fast.”
US high-grade bond spreads averaged just 0.79 percentage point on Friday, near multi-decade lows. Yields are still attractive, contributing to inflows across most credit asset classes, according to Sonali Pier, multi-sector credit portfolio manager at Pacific Investment Management Co.
However the strong issuance and demand, combined with relatively loose bondholder protections and covenants, leave room for potential weakening in corporate debt, Pier said. Some types of debt have already been hit. For example, private credit funds known as business development companies have seen their bond spreads widen, amid fears their loans to software companies will get hurt by artificial intelligence.
“Dispersion is a main theme for credit markets in 2026,” Pier said. “Today’s winner could turn into tomorrow’s loser.”
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